Impact of small‐ and medium‐sized enterprises sustainability practices and performance on economic growth from a managerial perspective: Modeling considerations and empirical analysis results

Abstract This study assesses the relationship between social, environmental and operational practices and performance with financial performance, focusing on small‐ and medium‐sized enterprises (SMEs). We seek to establish a relationship between the sustainability and the financial performance of SMEs in economic development, as expressed by the indicators of turnover and business growth. A dataset derived from 119 British, French and Indian firms is used and links between sustainability and the financial performance of SMEs are examined. Bayesian regression modeling was chosen and a model comparison approach was used to assess the robustness of the results to the specific choice of analysis with respect to the shape of the dependent variable's distribution. Overall findings indicate robust regression results especially for the highly significant covariates, but caution should be exercised when interpreting the borderline results. A significant positive association between certain items of sustainability and firms’ financial performance is identified as we found that different indicators of sustainability display associations with the two economic indicators and adoption of the former may influence SME performance.

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